Donald Rumsfeld declares war on IRS

By Jonnelle Marte

AFP/Getty Images

Not even Donald Rumsfeld understands his tax returns.

The former defense Secretary penned an annual letter to the Internal Revenue Service stating that he has “absolutely no idea whether our tax returns and our tax payments are accurate.” In the letter, links to which were posted on Rumsfeld’s Twitter account Tuesday afternoon, he notes that despite being a college graduate (slightly understating his resume) he and his wife do not understand their tax returns and that neither do most other Americans. “As in past years, I have spent more money than I wanted to spend to hire an accounting firm to prepare our tax returns,” he writes.

Rumsfeld is hardly the only taxpayer calling for a simplified filing process. Some critics of the tax code say more Americans would do their own taxes – about 60% of returns are done by preparers—if they had a better understanding of the information going onto the forms.

Some tax experts like Austan Goolsbee say one solution could be to have the IRS, which already receives income information from employers and banks, put together federal tax returns for people with simple tax situations. Goolsbee estimates that up to 40% of Americans would be able to take advantage of “return-free filing” and that it would save them more than $2 billion a year in tax preparation fees and 225 million hours of time.

Unsurprisingly, the biggest opponent of this simpler approach has been the tax preparation industry. An investigation from ProPublica found that lobbyists and public relations pros for Intuit, the maker of TurboTax, were behind much of the letters written in opposition to return free-filing.

As it stands, the tax code has 2,652 pages and more than 1 million words, according to the Tax Foundation. And the flagship 1040 Tax Form has gone from 30 lines and having one page of instructions to 87 lines and needing 206 pages of instructions. That’s why the Tax Policy Center recently released an annotated version of the 1040 Form with about 100 pages of details and factoids about each line.

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About Tax Watch

Only two things in this world can be said to be certain, according to Benjamin Franklin. Tax Watch is about one of them. The blog examines the complicated tax issues and legislative changes to help you tackle tough personal finance challenges – and avoid costly tax missteps. The lead writer is MarketWatch reporter Jonnelle Marte. Contributors include columnists Bill Bischoff, Andrea Coombes, and Eva Rosenberg.